Default Rates for Student Loans Continue Steady Climb

Student-loan default rates continue to rise, according to data released by the Education Department today.

The data, which reflect the percentage of borrowers who entered repayment in the 2008 fiscal year and defaulted within the next two years, show that the default rate climbed to 7.2 percent, from 6.7 percent. It was nearly three percentage points higher for borrowers in the bank-based program (7.8 percent) than for those in the competing direct-loan program (4.9 percent).

Both programs had higher cohort default rates than in 2007, when 7.2 and 4.8 percent of students with bank-based and direct loans defaulted, respectively.

As usual, the 2008 rate was higher for borrowers who attended for-profit institutions (11.9 percent) than for borrowers who attended public colleges (6.2 percent) or private colleges (4.1 percent).